Monetary policy of the Republic of Macedonia

Monetary policy of the Republic of Macedonia – an instrument of economic policy under the authority of the Central Bank, which by controlling the money supply affect aggregate demand. In the case of a short term, changes in the money supply may have a strong impact on aggregate demand and cause significant effects on real variables (investments, consumption, production, employment). In the long run, monetary policy only affects nominal variables, i.e. Monetary policy can not affect economic activity – the money neutrality setting. Although, in principle, monetary policy supports the global economic policy, however, in modern conditions, the stability of prices is imposed as the primary goal of monetary policy. In doing so, for the purpose of achieving the ultimate goal, the Central Bank can apply various strategies of monetary policy. Since April 1992 By October 1995 The NBRM applied the strategy of monetary targeting, whereby the money supply defined in the narrow sense of the word – the monetary aggregate M1. This monetary strategy is selected as the most appropriate for several reasons, as follows: the absence of developed instruments of monetary regulation, undeveloped financial markets, high correlation between aggregate demand and money supply, low level of foreign reserves, etc. From an institutional aspect, during this period there is a division of responsibility for the monetary policy between the Assembly, which formulates the objectives and tasks of the monetary policy and the Central Bank, which is competent for the implementation of the set monetary policy. Due to the instability of money demand, in October 1995. The NBRM left the monetary targeting strategy and moved to targeting the exchange rate. Within this strategy, the maintenance of the Denar exchange rate against the German mark (later, the euro) is an intermediate target of the monetary policy. At the same time, price stability is explicitly determined as the main objective of the monetary policy, with the formulation of the objectives and tasks of the monetary policy and the exchange rate policy by being jurisdiction of the NBRM. Regarding the instruments of monetary policy, immediately after the monetary independence, the Central Bank undertook measures for reforming the outdated monetary instrument. Thus, in May 1993. The NBRM started the process of gradually leaving selective loans from the primary issue, i.e. Loans that the Central Bank approves commercial banks for refinancing their credits approved for supporting agriculture and other priority sectors. By the beginning of 1994, as instruments of the monetary policy, the NBRM also applied the minimum liquidity and mandatory treasury bills. Also, directly after the monetary independence, the central place in the Central Bank’s interest rate policy had the discount rate, which was used as the basis for the establishment of all other interest rates of the NBRM. During this period, the NBRM used the mandatory reserve of banks as a kind of guarantee fund for payment of savings deposits and ongoing accounts of citizens, and starting in May 1993. It is applied as an instrument for monetary regulation. In January 1994 The NBRM introduced the limitation of the Denar placements of banks as a direct monetary instrument. However, starting in 1993, the NBRM gradually introduces indirect instruments of monetary regulation of the type of open market operations. Thus, in November 1993 The auctions of deposits, which are then replaced by auctions of loans. In February 1994 Auctions of treasury bills were introduced, which since 2000 They became the basic instrument of the monetary policy in the Republic of Macedonia. In July 2000 Foreign arranged operations were introduced, which have a small application and abandoned in June 2005. Since June 2003 The NBRM also introduced an obligation to allocate compulsory reserve in foreign currency. The central bank’s monetary instrumentation continued to enriched during 2005 -2006, when repo operations were introduced, a secondary market of treasury bills was introduced and treasury bills for monetary purposes were introduced. The purpose of these instruments is to increase efficiency in liquidity management and improve the transmission mechanism of monetary policy. Lit.: Kiki Mangova Ponjvic, Vanco Kargov, 60 years Central Banking in the Republic of Macedonia, National Bank of the Republic of Macedonia, Skopje, 2006. Mr. P.


Original article in Macedonian language Cyrillic alphabet
Кириличен напис МОНЕТАРНА ПОЛИТИКА НА РМ

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